Bundesnetzagentur recommends incentive regulation 2.0
Mr Homann: "To date, incentive regulation has ensured the investments needed. We propose making some adaptations to the regulation for it to remain compatible with the Energiewende in the future.
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Date of issue 2015.01.21
The Bundesnetzagentur has today published its report for the Federal Ministry for Economic Affairs and Energy on an evaluation of incentive regulation.
"To date incentive regulation has ensured the grid investments needed to safeguard security of supply,
" said Jochen Homann, President of the Bundesnetzagentur. He added, "Nevertheless, due to the changes and expansion measures required, we are recommending incentive regulation 2.0, which includes the adaptations needed for the scheme to remain compatible with the Energiewende.
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An incentive-based regulation scheme governs the German electricity and gas supply networks. This means that the revenues the network operators are allowed to earn are set by the Bundesnetzagentur or the regulatory authorities of the federal states. The network operators have a fixed annual budget that allows them to meet the maintenance, expansion and operation demands of the network infrastructure and to make a reasonable profit. This profit becomes greater, the more efficient an undertaking is.
The Bundesnetzagentur commissioned a scientific study, lasting over a year, taking its own data as a basis and also additional information provided by about 200 network operators, on how investment behaviour had developed since the introduction of incentive regulation. Further analysis was carried out on the profitability of network investments and the treatment of comparable network operators in other European countries.
The incentive scheme must take account of the considerable need for expansion and restructuring to enable the integration of renewable energy sources. At the same time it must ensure that only the necessary network expansion is implemented while keeping an eye on the costs. The Bundesnetzagentur gives specific options to achieve these goals through incentive regulation 2.0. Taking the current scheme as a basis, suggestions are made, amongst others, for better incentives to improve efficiency, including the use of innovative measures. Moreover, other points of criticism from the energy industry have been acknowledged, including the time delay between taking account of the expansion investments and the start of return flows.
Alongside other necessary corrections, four conceivable models for a future incentive regulation scheme are open for discussion; each model has a different focus but they are all strongly aligned with the change in the general scenario.
Any possible adaptation of incentive regulation will be decided by the issuer of the ordinance.
Additional information can be found at www.bundesnetzagentur.de/ARegVReport.